How to Prove That You Take Client Confidentiality Seriously

It’s extremely difficult to prove a negative. Senior executives hauled into court and politicians on the hot seat find it almost impossible to prove they didn’t know or didn’t do something. You gather up the courage to ask a friend to become a client. They fire back: “I don’t want my friends to know about my personal finances.” Or “I don’t do business with friends because I’m concerned about confidentiality.” How do you prove won’t blab? That you're pledged to following AICPA rules on confidentiality?

The Office Visitor

Your aim is to set them at ease by outlining the scenario they fear. When I worked in San Francisco I visited a satellite office in Napa. The person I visited had a bookcase filled with matching financial plans in binders. Curious code numbers were listed on each binder spine—not names. I stared, trying to figure it out.

He explained: “That’s a technique I use to get friends to do business.” He related when a friend meets him at the office prior to going out, the binders attract their attention. He explains we live in a small town and everyone wants to know everyone else’s business. Then he makes his point: “When you visit my office you never see a binder or report with the name of a client visible. If we ever worked together and one of your friends came here, they would never see your name either.”

It’s a very low-key way to communicate confidentiality.

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Their next fear is your innate honesty will blow confidentiality out the window. You will attend a party, the client’s name will come up and you will say complimentary things about them. It’s so obvious you know them well. They ask “How did you meet?” Because you are incapable of lying you disclose they are a client. Busted.

Generalities or bending the timeline come to your rescue. When talking with a friend you might mention you are often put into the position of discussing friends in common in social situations. When asked “How do you know them?” or “Where did you meet?” You volunteer “We met downtown several years ago.” You were honest (your office is downtown) but you were vague. It’s unlikely they will press for details.

Need a different approach? Consider the timeline instead. It’s likely you and the client share some overlapping social circles. You might belong to the same country club, church, or temple. You frequent the same gym or drink at the same bar. This connection might have developed before or after they became a client, meaning you discovered they’ve belonged to your country club after they became a client but you never connected a name to the face in previous years.

When asked: “How do you know them?” you stress the organization. “We belong to the same gym” or “Our children go to the same school.” You have multiple connections to your client; you aren’t required to reveal them all, especially if it would compromise confidentiality.

Past Performance Is a Predictor of Future Results

“How do I know you won’t talk about me?” We are back to the difficulty of proving a negative. There is a way.

Let's assume you have known each other for several years. You run with the same crowd. They might be commuters, school sideline parents, the poker circle, or fellow board members at a charity. You are all reasonably successful in your respective fields. Use these points to begin the conversation.

“We’ve known each other 15 years. We know a lot of the same people. It’s possible some of those people do business with me. Have you ever heard me mention a client’s name before? I’m certainly not going to start now. Our business is different from many others because we are bound by confidentiality.”

Pillow Talk Worries Me

Your friends believe you are tight-lipped. You will never volunteer them as a potential donor at the hospital’s capital campaign committee meeting either. What about your spouse? Couples aren’t supposed to have secrets. If you spill the beans when asked, “How was your day?” your spouse might be spreading juicy gossip the next day. They aren’t bound by confidentiality, are they?

Years ago I met a dual-income couple. The wife sold real estate and the husband repaired foreign cars. We bought a house and became friends. I was concerned the financial details we revealed in the mortgage application process would be shared with her husband. She put my mind at ease by saying: “He doesn’t tell me how to sell real estate and I don’t tell him how to fix cars.” There are lots of dual income couples out there. Attorneys and medical professionals must keep data confidential. People understand how to compartmentalize without offending the other person. You can easily explain you each have an understanding there are some subjects you have agreed not to talk about.

Friends have a legitimate fear you will talk about their personal finances. It’s easy to put them at ease.

About the author:Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania. He provides HNW client acquisition training for the financial services industry. His book "Captivating the Wealthy Investor" can be found on Amazon.com.

Replies

In the small town setting you describe, I am led to ask the question, "What happens when your 'friend' decides to fire you, or simply to choose someone else for professional services? How confident are you that the friend won't share negatives about YOU?!" Doing work for friends is always tricky . . .and maybe not the best idea.

Thank you for your comment my article. You have asked three questions:

First, what happens when your friend decides to fire you? This might happen for one of several reasons like unrealistic expectations, personalities don't click in a business setting, concerns in a small town everyone knows everyone else's business or even " they got a better offer."

When I did business with friends (and others too) I would explain "You should get a report card. If I'm doing a lousy job, you should be able to fire me." Periodic portfolio reviews were the report cards. This lessens the anxiety about unwinding the relationship because there's a procedure in place - and it was your idea.

Second, what happens if they choose to do business with someone else? In this situation your options are pretty limited. You can tactfully position yourself as the alternative: "if anything ever changes..."

Third is "your friend sharing negative comments about you." We can't control the actions of others. Let's consider these factors. You either did or didn't' do something wrong. Next, they lie or they tell the truth. This gives four likely outcomes. If you did something wrong and they talk, there isn't much you can do. If you are dealing with ethical people, the other possible outcomes are. Less likely.

In a small town the prospect pool is also smaller. Avoiding doing business with people you know is more difficult. It's hard to grow a business by focusing on who you won't do business with. When working with friends setting ground rules at the outset is a good strategy. Consider the following: you likely have great friends who started as clients. Friends can also make great clients, especially if you have a positive reputation that precedes you.